Due to COVID-19, a large number of spinning
mills have stopped production worldwide. There has been low demand for spare
parts and wear & tear parts and also new machines. Rieter, a world’s
leading supplier of systems for short-staple fiber spinning, has implemented
comprehensive crisis management.
Priorities are being given to protecting
employees, fulfilling customer commitments and ensuring liquidity. The
necessary measures to protect employees have been implemented worldwide.
The order backlog of well in excess of CHF
500 million is being processed largely according to plan, despite the existing
bottlenecks in the supply chains. Less than 5% of the orders in the order
backlog have been canceled.
Rieter has already implemented measures to
ensure liquidity and reduce costs. The company has good net liquidity and
undrawn credit lines in the mid three-digit million range.
Loss
expected in the first half of 2020
Rieter expects sales and earnings in the
first half of 2020 to be significantly below the prior year level. The effects
of COVID-19 will place an additional burden on the first half of 2020. Rieter
therefore expects sales in the first half of 2020 to be less than CHF 300
million. Despite the countermeasures implemented at the net profit level, this will
lead to a loss in the mid double-digit million range.
To
introduce short-time working to adjust capacity
Rieter plans to apply for short-time
working for the areas with forecasted low capacity utilization at the locations
in Switzerland and Germany. The application will be for 40% short-time working
in the third quarter of 2020.
Areas that are responsible for processing
the order backlog are excluded from short-time working. This also applies to
the assembly of machines in Winterthur, the relocation of which is being
implemented as planned.
As a sign of solidarity, Rieter’s Board of
Directors, Group Executive Committee and the senior management will waive
10%-20% of their salaries temporarily.
Implementation
of the strategy
In recent years, Rieter has implemented the
strategy based on innovation leadership, strengthening the business in
components, spare parts and services and the adjustment of cost structures. The
company intends to forge ahead with the implementation of the strategy in the coming
months, thus strengthening its market position for the time after the COVID-19
pandemic.